ACCA Applied Knowledge · Financial Accounting · Suspense accounts
A purchase of goods on credit for $1,800 from supplier Dalton was recorded by debiting purchases $1,800 and crediting Dalton's account $1,080. A suspense account was opened for the resulting difference. What entry corrects the error?
Debit suspense $720 and credit the payables account of Dalton $720. The credit to the supplier was understated by $720, so the supplier account must be increased, and the matching debit clears the credit balance that was placed in suspense.
- ADr Suspense $720, Cr Payables (Dalton) $720Correct
- BDr Payables (Dalton) $720, Cr Suspense $720
- CDr Purchases $720, Cr Suspense $720
- DDr Suspense $1,080, Cr Payables (Dalton) $1,080
Explanation
Debit $1,800 exceeded credit $1,080 by $720, so suspense was credited $720. To clear it, debit suspense $720 and credit Dalton $720, bringing the supplier balance to the correct $1,800. Option B reverses the entry and would worsen the position.
Did you get it right without looking?
One question tells you little. A timed set on Suspense accounts shows your real accuracy, how long you take and where you lose marks.
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